Huawei deepens dive into EVs, seeks control of small automaker -sources
30/04/2021 09:24
(Adds Huawei response)
By Julie Zhu
HONG KONG, April 29 (Reuters) - China's Huawei Technologies
is in talks to take control of a small domestic automaker's
electric vehicle unit, two people with direct knowledge of the
matter said, a move that would be a strategic shift for the
world's largest telecom equipment maker.
A company spokesman denied such a step, however.
Huawei, which has been battered by U.S. sanctions, is in
talks with Chongqing Sokon 601127.SS to acquire a controlling
stake in the latter's Chongqing Jinkang New Energy Automobile,
said the sources.
The move will allow Huawei HWT.UL to make intelligent cars
bearing its own nameplate, they added. Jinkang counts U.S. EV
brand Seres, formerly known as SF Motors, as its main asset.
It would also provide the first evidence that Huawei is
looking to go beyond just offering auto operating systems and
have an end-to-end presence in the EV business.
However, the Huawei spokesman said, "Huawei is not making
cars," and added that it was not looking to acquire controlling
stakes, although without specifying where.
Sokon did not respond to requests for comment.
The push into smart cars, if finalised, would signal a major
shift in business focus for Huawei after two years of U.S.
sanctions that have cut its access to key supply chains, forcing
it to sell a part of its smartphone business.
Underscoring the shift, the company's rotating chairman Eric
Xu announced pacts with three state-owned Chinese carmakers,
including BAIC Group, to supply "Huawei Inside", a smart vehicle
operating system, at the Shanghai Auto Show earlier this month.
Huawei's foray into EVs comes as technology firms such as
Xiaomi Corp 1810.HK have been stepping up efforts in the
world's biggest market for such vehicles, as Beijing heavily
promotes greener vehicles to reduce carbon emissions.
"As individual consumer demand for smart EVs has been
picking up notably since mid-last year, the track is now clear
and solid in front of the tech giants," said Yale Zhang,
managing director of Automotive Foresight.
"Despite of their years of success and experience in
smartphone markets, it will still take a few years for them to
build a car brand acceptable in the EV sector."
As part of the deal, Huawei also plans to buy an
undetermined stake in privately-owed Chongqing Sokon Holdings,
the biggest shareholder of Shanghai-listed Sokon, said one of
the sources.
Richard Yu, head of Huawei's consumer business group who led
the company to become one of the world's largest smartphone
makers and has recently shifted his focus to EVs, is leading the
talks with Sokon, said the two people.
The telecom giant looks to finalise the deal as soon as
July, said the other source.
MASS PRODUCTION
Huawei is also seeking to control the EV brand ArcFox of
BAIC's BluePark New Energy Technology 600733.SS , which
recently launched its Alpha S model equipped with the "Huawei
Inside" system, said the two people and another person with
direct knowledge.
But BAIC is more keen to have Huawei just as a minority
shareholder in ArcFox, they added.
A BAIC representative referred the query to BluePark which
did not immediately respond to a request for comment.
All the sources declined to be named.
In February, Reuters reported that Huawei plans to make EVs
under its own brand and could launch some models this year.
urn:newsml:reuters.com:*:nL1N2KW0HV
Sales of new energy vehicles, including pure battery
electric vehicles as well as plug-in hybrid and hydrogen fuel
cell vehicles, are expected to make up 20% of China's overall
annual auto sales by 2025.
For months, Huawei has been deeply involved in the operation
and manufacturing of the little-known Sokon and its loss-making
Seres unit.
Under the tie-up, Seres's first model, "Huawei Smart
Selection" SF5, debuted at the Shanghai Auto Show and received
over 3,000 orders within two days after the pre-sale started
last week, according to Seres.
Huawei is selling SF5 vehicles in its stores across China
including its online store VMall.com.
The company aims to launch the first intelligent car under
its own brand for mass production at the earliest by the end of
this year, said one of them.
Huawei has high expectations for the model, which is under
development based on the Seres SF5, but the existing supply
chain of Sokon is struggling to meet such expectations, said the
same person.
"The supply chain for the auto industry is very long and
complicated," said the person. "Huawei does have its strength in
software and platform but its ideas can't be realized without
solid technology improvements in the supply chain."
(Reporting by Julie Zhu in Hong Kong and Zhang Yan in Shanghai;
Additional reporting by Yilei Sun and David Kirton; Editing by
Sumeet Chatterjee and Raju Gopalakrishnan)
((julie.zhu1@thomsonreuters.com; +852 2843 6519; Reuters
Messaging: julie.zhu1.thomsonreuters.com@reuters.net))